Taiwanese banker in US fraud case granted bail

Bloomberg

Sun, Jan 27, 2013 - Page 13

A former Commerzbank AG and Societe Generale SA banker charged with aiding Olympus Corp’s US$1.7 billion accounting fraud was granted bail by a judge in New York.

US District Judge Laura Taylor Swain ruled on Friday that Chan Ming-fon, a citizen of Taiwan who lives in Singapore, may be released on a US$5 million bond to be secured with US$1 million cash and US$4.5 million in properties located in the US, Japan and Singapore.

He was arrested on Dec. 20 last year in Los Angeles, California.

Chan, who was indicted on Jan. 17, is charged with one count of conspiracy to commit wire fraud for allegedly helping the Tokyo-based maker of cameras and medical equipment hide losses from investors and regulators.

Assistant US Attorney Bonnie Brooks Jonas told Swain on Friday the government plans to add more charges, including money laundering. Chan faces up to 20 years in prison on the conspiracy charge.

Olympus in 2011 restated five years of earnings and took a US$1.3 billion cut in net assets after admitting it had paid inflated fees on takeovers and overpaid for three companies to conceal past investment losses.

In September last year, three former Olympus executives, including ex-chairman Tsuyoshi Kikukawa, pleaded guilty to their roles in the accounting fraud.

The losses at Olympus were exposed by Michael Woodford a few months after he was appointed as the company’s first non-Japanese president in 2011.

Chan’s lawyer, Christine Chung, told Swain on Friday that her client had already testified in Singapore — most recently in September last year — in a Japanese inquiry into the Olympus scandal.

Chung said her client was unaware that Olympus was using transactions to hide its liabilities.

She said Olympus executives told the company’s bankers they were making investments and trying to conceal them from competitors.

“He’s not in any way, shape or form a major player,” Chung said.

Chung told Swain that Chan has US$500,000 available to buy or rent a place to live in New York. His wife has made a bid on an apartment, Chung said.

Swain, who agreed to a bail package proposed by Chung, said Chan must remain in New York and wear an electronic ankle bracelet to ensure he does not leave his home.

Jonas argued against bail, claiming Chan presents a flight risk. She said he is adept at moving funds overseas and has a “capacity for deceit.”

“He created phony documents and confirmation letters designed to thwart auditors’ inquiries,” she said.

Prosecutors claim that from 1999 to 2010, Chan conspired to help Olympus hide hundreds of millions of US dollars in liabilities, creating phony documents to mislead the company’s outside accountants.

They claim he was paid US$10 million for falsely certifying that he was placing money for Olympus in low-risk investments, including Japanese government bonds.